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How much could R&D tax credits be worth to your business?

Fellow DBA members have received funding for their businesses through R&D tax incentives, could you?

 

Research and development (R&D) tax credits are a valuable government tax incentive that rewards UK companies for investing in innovation. If a project meets the government’s definition of R&D, you can recoup a percentage of your innovation costs.

 

Many of our members aren’t aware they can benefit from R&D tax credits, haven’t heard of the incentives, or if they have, don’t think they are eligible. These DBA members were pleased to discover that they were eligible for R&D tax credits and also able to claim back significant sums:

James Cowdale, Creative Director, Third Floor Design

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What were your preconceptions on R&D tax credits?

We had been through the claims process a couple of years ago which involved a lot of my teams time to go back through historic work and break this down to determine what was deemed as R&D. The process took a long time and the return was minimal. As a brand agency we didn’t see there was a huge amount of R&D Claims to be made so we turned away companies offering to help with this. 

 

How easy was the process?

Forrest brown made contact through another workshop we attended and we gave them our thoughts on R&D claims. I don’t think it was the first time they’d heard this type of feedback but they made contact with us after the event. With some reluctance and after a huge amount of convincing from the team, we agreed to engage with them for our 2017, 2018 and 2019 accounts. From that point onwards, FB were on the case, they took calls with us, provided templates for our projects and worked through the case in detail to ensure we could maximise on the claim. It turns out we do a lot of valuable R&D but we would never have managed to make the claims if it wasn’t for their determination and patience. 

 

How has it impacted your business?

All claims were successful which in turn has reduced our tax liability on this years accounts and we saw a considerable rebate from the government which has never happened before. We have seen improved cash flow and future cash-flow. It’s also changed how we manage and process projects. We document everything now to determine whether it could fall under R&D which will make the process even easier next year.

 

Chris Lumsden, Partner, Good

What were your preconceptions on R&D tax credits?

That they weren’t for us. We initially did consider them, but believed they were perhaps more relevant for a digital development house. The R&D part of the name is misleading.

 

Good's work for Drayton on the 9 Degree Installer Network
Good’s work for Drayton on the 9 Degree Installer Network

How easy was the process?

It was simple. Because we keep time-sheets relating to every task going through the studio, it was easy to dig out accurate records of how much time our teams had spent on qualifying projects. Also, working with ForrestBrown was an absolute pleasure – they took most of the pain away. 

 

How has it impacted your business?

Significantly. We were able to claim back for FY 15/16 and 16/17 which came through as cash payments because we’d already paid our corporation tax. The FY 17/18 claim has made a huge dent in our corporation tax allowance for the year. We’ve also changed our perspective on how the digital part of our business works. From how it’s resourced, all the way through to the type of projects we take on – which I suppose is what the government wanted when they set the R&D tax credits system up.

 

Alex Tosh, Founder, Creative Sponge

Some of our members were so pleased with the service and outcome of the process that they returned a second time. Here’s Creative Sponge’s first account of their experience:

 

sponge

What were your preconceptions on R&D Tax Credits?

I wasn’t aware of R&D tax credits before receiving an e-mail on it from the DBA. Keen to find out more, I contacted ForrestBrown – as the DBA recommended specialists – and decided it was a no-brainer to apply. Our business involves a lot of digital development, so we seemed to fit the profile well.

 

How easy was the process?

The process was straightforward; the hardest part was ensuring we had all the correct information. We have an agency management system which tracks time and projects so it wasn’t too hard to extract the right data; our accountants supplied the relevant financial bits. ForrestBrown made it pretty easy and did all the hard work putting a report together for HMRC. The team at ForrestBrown were professional and knowledgeable, keeping us informed at each stage of the application process. In all it was a relatively painless experience!

 

How has it impacted your business?

After ForrestBrown’s fee, we ended up with a lump sum of around £20k which we spent on team training and equipment, to further develop our in-house skills and capabilities. We’ll be looking to make a claim this year too and whole-heartedly recommend the team at ForrestBrown.

 

And here’s their second account…

 

How easy was the process the second time around?

A quick call to ForrestBrown was all it took to kick-off the application process. R&D covers a variety of activities, for us, it was around digital innovation and exploring new methods and techniques in website development. The process of applying was incredibly straightforward, we were assigned a dedicated ForrestBrown account manager to look after our claim.

 

The most time-consuming element was gathering together the relevant bits of data – final year accounts, project data, employee and timesheet information. Once this was compiled and sent over to our account manager, we then had an in-depth call to chat through qualifying projects in more detail. Our account manager then went through the process of writing up our claim – this was a great timesaver, I want to spend my time running the business not writing claim reports. After a wait of around 8 weeks, we were told our claim had been successful. In our case, the R&D Tax Credit benefit went straight toward offsetting our Corporation Tax liability.

 

How has it impacted your business?

Our claim came to just over £32k, which, for a small business, is huge. The money allowed us to employ an additional team member, adding to our overall skillset and offering.

Nick Dormon, Managing Director and Founder, Echo Brand Design

unknown-3What were your preconceptions on R&D tax credits?

We had previously been contacted by a firm offering to review the possibility of Echo receiving tax credits, but their conclusion was that it was not viable. We were therefore not at all confident ForrestBrown could help.

 

How easy was the process?

ForrestBrown had a far better understanding of our business than the previous company and were able to identify the part of our business eligible for the credits. The process is very straightforward and after the initial assessment we just had to provide them with the specific financial information they required and they did the rest. We have made significant savings on tax for several years now.

 

Lorraine Tovey, Client Services Director, 20.20

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Churchill Downs Clock by 20.20

What were your preconceptions on R&D Tax Credits?

We had considered our eligibility for applying for tax credits previously, but the process seemed complicated and at the time we didn’t believe our project scope would include much R&D. I don’t think the requirements or criteria were set out as clearly as they are now.

 

How easy was the process?

Very easy but time consuming. Whilst the team at ForrestBrown are great and guided us through each step, the gathering of data is fairly laborious – that could be because our projects are diverse and R&D is interwoven within our scope with many people involved in the R&D process. 

 

How has it impacted your business? 

Obviously the financial payback makes it worthwhile. This year, we will be tagging projects where we perform R&D so that data collection next year will be easier. I think we are now all more aware of the value of encouraging clients to explore more R&D on a project and it has reenergised our passion for innovation, taking it from something we explore as background research, to a tangible deliverable. 

Perry Mason, Partner & Digital Director, Pollitt & Partners

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What were your preconceptions on R&D Tax Credits?

We had previously thought it was going to be hard to distinguish which parts if the business would be relevant. It felt like a big task to take on, that would be time consuming and require quite a lot of digging through spread sheets.

 

How easy was the process?

Very straight forward, we already had a lot of information that was required, it just needed a bit of reformatting.

The process wasn’t too time consuming and we managed to make a claim for the last two years. ForrestBrown were really good, very efficient and well organised, this took a lot of the pressure off.

 

How has it impacted your business?

Financially we got back a lot of tax back- two years’ worth. It has led our business to look at projects in a different way. We are now much more likely to experiment. Internally there is the acknowledgement that you’re working on new and different projects, which gives more freedom for creatively, it has created a different mindset. We will be claiming again this year.

Peter Rickett, Co-Founder, Designworks LTD.

 

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What were your preconceptions on R&D Tax Credits?

Designworks has considered R&D Tax credits on a number of occasions over the years, we have been approached by ‘experts’ and engaged two companies on separate occasions, the outcome of which was both time consuming and poorly managed. After talking to the DBA we decided to try the process one more time, Adam spoke very highly of member’s experiences working with Forrest Brown and assured us of their professionalism and approach. We have been delighted with the work carried out on our behalf, with a dedicated contact and very clear direction, Forrest Brown have worked very hard on our behalf, their communication is crystal clear and, following some initial ‘hand-holding’ we have successfully applied for, and been granted our first R&D Tax Claim, subsequently we have made two more claims which are now completed and awaiting payment.

 

How easy was the process?

The claim money has been re-invested into the company, helping to finance both staffing and capital equipment, both of which will enable us to provide an even higher level of service in the future.How has it impacted your business? 

 

How has it impacted your business? 

In summary, Forrest Brown are a very cost effective, professional and approachable team of tax experts with a clear understanding of the design and development process, I cannot recommend their services highly enough.

Iain Millar, Head of Innovation, Rufus Leonard

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What were your preconceptions on R&D Tax Credits?

Our field had advanced so much in just the previous two years that looking back we felt there was no way the work we delivered broke new ground. But just because something we considered innovative two years ago is not considered an advance today, doesn’t mean the project does not qualify as research and development.

 

How has it impacted your business? 

R&D tax credits have had a big impact on our business. The incentive was still a new concept to us and we weren’t sure of the value of the benefit we might receive. In fact, the credit helped fund some refurbishment of our premises which we may have been more costly to finance by other means.

ForrestBrown, the largest specialist R&D tax credit consultancy in the UK, have delivered over £4.5 million in R&D tax credits to DBA members and can show you:

  • how your business can qualify
  • how much R&D tax incentives can be worth to your business 
  • the positive impact of claiming, with real-world examples from your fellow members

Contact Eleanor Singh at the DBA, who can set up an initial discussion with ForrestBrown to see if you are eligible.

You can also watch a webinar recently delivered by ForrestBrown for DBA members, explaining how to use R&D tax incentives to grow your business. Access the webinar here: Funding for design businesses: R&D tax incentives 

Image credits:

Rawpixel | Unsplash

Good

Echo

20.20

Pollitt & Partners

Rufus Leonard

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